Scud alarm fails to shoot down Footsie

THE FTSE 100 had 4000 in its sights again after bouncing back from a record eight-days-in-a-row decline that wiped 6% off values of the top 100 UK companies. Bolstered by Wall Street's overnight rally, the benchmark index jumped 70 points before closing 49.9 to the good at 3974.9.

A late collapse of 32 1/2p to 131p in defence giant BAE Systems following the shock delay in two big contracts which dealers fear could make it miss full-year profit expectations, spoilt what was generally a good day.

Sterling held at $1.5760 with the euro at 64p and $1.01.

Although dealers were delighted to see blue on their screens again, they remain extremely cautious. The seizure by the US military of a ship carrying 12 Scud missiles highlighted the worldwide terrorist threat. Meanwhile, the world awaits the result of the United Nations' weapons inspection in Iraq.

Bears believe the traditional Christmas and year-end rally will not happen this year. If today's US November sales data disappoint, they could easily spark a renewed sell-off on Wall Street, sharply down early yesterday before bouncing.

With many stocks trading at - or very near - basement levels, companies continue to buy back their own shares. Drugs giant GlaxoSmithKline improved 13p to 1203p after buying back 830,000 at 1199p, while trendy fashion group Next rose 20 1/2p to 797 1/2p after purchasing 475,000 at an average 789.63p.

Currys-to-PC World electrical retailer Dixons shrugged off a bearish ETrade Securities note and closed 6 1/4p dearer at 164 1/2p. Analyst Isabelle Payet has downgraded the retail sector to 'underweight'. She says consumer spending is unsustainableand expects a sharp slowdown in the New Year.

Other sell recommendations include Boots (6p up at 561p), GUS (15p dearer at 583p) and Selfridges (1 1/2p better at 250p). Selfridges is losing Vittorio Radice, its respected chief executive, to Marks & Spencer (7p up at 331 1/4p) in March.

Nervous selling fuelled by talk of another profits warning saw Arm Holdings, which develops chips for mobile phones, touch 56 3/4p before closing 2 3/4p down at 58 3/4p on hefty turnover of 17.4m. Arm issued its first earnings alert in October, but was recently buoyed by growing hopes of a recovery in mobile handset sales. Merrill Lynch raised its forecast sales by 2.4% and 5.7% for 2003 and 2004 respectively.

Black taxi maker Manganese Bronze accelerated 9p to 76 1/2p after picking up a bidder. A preliminary approach has been made and a further announcement will follow in due course. Better-than-expected interim profits of £8.9m and the board's reassurance that full-year results will be in line with expectations helped computer services group Anite improve 3 1/2p to 25 1/2p.

Mears, Bob Holt's support services group, eased 1 3/4p 70 3/4p despite another earnings enhancing acquisition. For an initial £815,000 and a maximum £3.5m, Mears has acquired Southampton-based M&T Group, which provides building maintenance and painting services to the public sector. Poole Council and Portsmouth Council are major customers.

Gold explorer Griffin Mining sparkled at 12 3/4p, up 1 1/4p. Buying followed confirmation that gold production is close at its Caijiaying Project in China. The potential is said to be enormous as Griffin has so far drilled only 1% of the licensed area.

After a couple of institutional investors dumped their stock following Wednesday's profit warning, internet minnow Ingenta plummeted to 7 1/4p before punters sniffed around for cheap stock. The close was 9 3/4p down at 8 3/4p. Speculative buying on revived takeover gossip lifted City Centre Restaurants 2 1/4p to 52 1/4p.

Steel maker Corus (26 3/4p) freight group Brambles (142 1/4p, up 3/4p) and Cable & Wireless (44 1/2p, up 3 1/2p) were ejected from the Footsie, replaced by British Airways (158 1/2p, up 1/4p) and Whitbread (568p, up 3p), both returning, and property group Liberty International (575p, up 11 1/2p).